Nifty weekly outlook: Bulls looking for a relief rally ahead of June F&O expiry

Indian markets managed to recover from lower levels after two weeks of sharp cuts thanks to a recovery in global markets and a cut in commodity prices. It seems that this recovery may see a further extension and we can expect a decent rally in the coming days in equity markets. The technical structure of Dow Jones is encouraging whereas a sharp fall in commodity prices and positive signals on the Russia-Ukraine stand-off can act as major tailwinds. 

We have a June month F&O expiry where bulls will look for a short-covering and a relief rally. Apart from F&O expiry, monthly auto sales numbers and monsoon development will be important triggers.

On the global front, US GDP, PMI, and Job data will be important factors while the market is looking for some positive development on the Russia-Ukraine front.

Crude oil and rupee movement and FIIs' behavior will be other important factors.

Technically, the Nifty formed a bullish piercing line candlestick on the weekly chart after taking support at 100-week SMA which indicates a pullback rally on the card. On the upside, 15700-15900 is an immediate supply zone; above this, we can expect a rally towards the 16050/16200 level. On the downside, 15500 should act as strong support now.

Bank Nifty is bouncing back from the key support of 32500 where 34200-34500 is an immediate resistance zone; above this, we can expect a rally towards the 35200-35500 zone. On the downside, 33000 should act as immediate support.

If we look at the derivative data then FIIs' long exposure in index future stands at 25% whereas the put-call ratio is sitting at 1.04 level therefore there is still scope for a major short-covering rally.

Santosh Meena is Head of Research at Swastika Investmart Ltd.